Questioning the cost of Vermont Health Connect

by Robert Maynard

The Shumlin Administration is asking for funds from the Vermont legislature to pay for the annual costs of “Vermont Health Connect” and the Legislature is justifiably skeptical.  It appears that the cost on a per person basis to set up the health connect in Vermont is the  highest in the nation.  The skepticism on the part of the Vermont Legislature that the Shumlin Administration met with is covered in this Vermont Digger story:

The administration is asking the Legislature to allocate $18.4 million annually to operate and maintain the state’s new health insurance marketplace — the web-based exchange called Vermont Health Connect. But before the House Ways and Means Committee determines how to raise that new sum on a yearly basis, legislators want to verify that the administration has done its due diligence.

“My biggest problem is that I just don’t know how to judge what’s a reasonable cost given what we need to do,” said Rep. Martha Heath, chair of the House Appropriations Committee. “That’s why we’re asking outside consultants to take a look at it.”

Perhaps this is what got them suspicious:

Mark Larson, commissioner of the Department of Vermont Health Access, told the House Appropriations Committee last week that he didn’t think the state could run the new marketplace for less.

Larson did concede, however, that Vermont’s per member cost to operate a state-run exchange — for about 110,000 residents at the outset — is on target to be the highest in the country.

Larson makes the argument that the high per person cost for Vermont is largely a factor of our small population.  The problem with his explanation is that as of July 2012, Vermont’s population was 626,011 compared to 576,412 for Wyoming.  Why is the per person cost of setting up a health care exchange in Vermont “on target” to be higher than a state like Wyoming with a lower population?  This is a question that the Vermont Legislature might want to ask Governor Shumlin before approving his suggestion for yet another tax hike:

To raise the lion’s share of the $18.4 million, the administration has proposed levying a 1 percent increase on health insurance for total claims in a fiscal year. This increase would raise roughly $17 million annually, Larson said.

Health insurers say this tax hike would raise health insurance rates for Vermonters.

 

One thought on “Questioning the cost of Vermont Health Connect

  1. So far we have an exchange that cost over $100 Million to set up, donated by the Fed. ACA, and now to run the Exchange the cost will be 18 Million a year. This Exchange is to service small business, individual and the Medicaid market. The existing system that takes care of the small businesses, which is about equal to the other two two markets paid out a total of $5 Million per year to agents to communicate and service the small business market place. The agents provided a level of service that is better than the proposed exchange provided personal visits, an Exchange listing of all plans and carriers worth looking at in VT along with experience and expertise. Conclusion: To save about $8 Million a year the legislature should have the private sector take care of the exchange.

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